This is a partial transcript from "The Beltway Boys", March 26, 2005, that has been edited for clarity.

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MORT KONDRACKE, CO-HOST: It’s ups and downs time.

UP: President Bush (search). His plan for personal security accounts got a boost this week by the Social Security trustees reporting that the program is going to go bust a year earlier than expected, and Senator John McCain (search) joined him on the stump. Here’s McCain.

(BEGIN VIDEO CLIP)

U.S. SENATOR JOHN MCCAIN (R), ARIZONA: I say to our Democrat friends, Come and sit down at the table and let us work together to save the safety net for future generations of Americans. The door is open to the White House and on the Republican side of the aisle.

(END VIDEO CLIP)

FRED BARNES, CO-HOST: McCain was good. Well, he did campaign on this in 2000. He’s not a newcomer to this issue.

KONDRACKE: Right, the news is not all good for Bush. The Gallup poll (search) shows that his overall approval rating is down to 45 percent, which is the lowest in his presidency. A lot of people are attributing this to his involvement in the Schiavo case. I actually think that it’s the result of high gasoline prices, which is the public’s automatic meter of how the economy is going. And it’s, you know, the, the price of gas is up 21 cents a gallon over, over the last month.

So I think that’s what’s really behind it. But look, fundamentally, the economy is in good shape. Fundamentally, Iraq is headed in the right direction, and Bush’s foreign policy is too. And I think he’s ahead, he’s gaining on the Social Security issue.

BARNES: So, Mort, let me get this straight. Your position is, he’s up, but he’s down.

KONDRACKE: Well, there, it’s a mixed picture...

(CROSSTALK)

BARNES: You know, the door is open, it, as McCain said. Bush has shown remarkable flexibility on the whole Social Security issue. Obviously he doesn’t want a tax rate increase, and he wants some personal accounts. And, but he was talking about this progressive indexing now, you know, which would deal on the solvency side, and would make sure that at least lower-income people got no cut in benefits at all.

And Democrats are back to their earlier position of nothing needs to be done about Social Security. In The Washington Post, in an editorial, called this position of Democrats dishonest. This is The Washington Post, this wasn’t The Weekly Standard, this was The Washington Post. It was a good editorial. All right.

UP: California Governor Arnold Schwarzenegger (search). A Sacramento judge ruled this week that Schwarzenegger and other California politicians are free to raise unlimited sums of money to push ballot measures, a huge win for the governor, who relies on ballot initiatives to bypass the Democratically controlled legislature.

It is a huge win, because what is the hole card that Arnold has? I mean, it, Democrats dominate the legislature, but they know on practically any issue, if he takes the issue to the polls in a referendum, he can beat them. So this is how he gets them to compromise, just to stop him from doing that.

KONDRACKE: Yes, well, if the issues were so popular, and they should be popular, I think the Arnold initiatives are basically good...

BARNES: Yes, they are.

KONDRACKE: Why does he have to collect all this, this oodles of corporate money in order to push it?

BARNES: TV.

KONDRACKE: The problem is that campaign finance reforms prevent corporations and unions and also rich individuals from piling unlimited soft money into candidates, and political parties, but now they can do it for referendum? Do you think that’s a good idea?

BARNES: I do.

KONDRACKE: Well, I suspected you did, but I don’t. OK.

DOWN: Mexican President Vicente Fox (search). He didn’t get the concessions that he wanted on the guest worker program after meeting with Bush this week. The program would allow Mexican immigrants to work legally in the United States for a limited time. Bush supports the guest worker program but lowered expectations on its passage in Congress. Watch.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Mr. President, you got my pledge. I’ll continue working on it. You don’t have my pledge that I, that Congress will act, because I’m not a member of the legislative branch. But you will have my pledge that I will continue to push our Congress to come up with rational, common sense immigration policy.

(END VIDEO CLIP)

KONDRACKE: Well, the question is, you know, how hard is Bush going to push? And, and how soon is it going to be, going to be taken up in Congress? The longer things last, the more the enemies of immigration reform have a chance to, to scare everybody that we’re going to be overrun with immigrants, which we are already.

And I think Bush is on the right side of this issue. However, you know, that was not a big assertion of confidence on, on his part toward Vicente Fox.

BARNES: Yes.

KONDRACKE: Also, the, the Canadians, the situation with Canada is, didn’t move very much in a positive direction at all.

BARNES: Yes.

KONDRACKE: We’re limiting Canadian lumber imports.

BARNES: Yes.

KONDRACKE: We’re preventing Canadian beef from coming into the United States. And meanwhile, the Canadians are blocking any cooperation on missile defense.

BARNES: Yes, they’re getting missile defense for free. They’re free riders, so the heck with lumber.

(LAUGHTER)

KONDRACKE: I thought you were a free trader.

BARNES: I am, but, you know, sometimes you have to give somebody a little whack.

KONDRACKE: With a hammer?

BARNES: A hammer, maybe. OK. Look, Bush is committed to immigration reform. Remember back in the 2000 election, he was a different kind of Republican? This is one of the areas where he is a different kind of Republican, going back to, what, 1995. When was Prop 187 in California that would have barred illegal immigrants and their families from getting any services at all? Bush opposed it.

And one result, of course, is a political result; he’s very, done very well among Latino candidates.

But why, why is Bush’s stand on this fairly courageous? Because I think a majority of the Republican Party is against him on this issue. And it’s accurate what he said, that there doesn’t look like there’s much chance of anything happening in Congress with his bill.

KONDRACKE: I want to see him use his built-up political capital that he won in the election in getting, bringing, helping bring them into bigger majorities in Congress for this issue.

BARNES: Yes, he will, just but not this year. All right.

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